Section 40A(3) :No Dis-allowance when the assessee had no bank account

No disallowance due to cash payment exceeding Rs. 20,000 for purchase of goods as assessee had no bank account therein

[2015] 57 taxmann.com 391 (Cuttack - Trib.)

IN THE ITAT CUTTACK BENCH

Radha Shyam Panda

v.

Income-tax Officer

Section 40A(3) of the Income-tax Act, 1961, read with rule 6DD of the Income-Tax Rules, 1962 - Business disallowance - Cash payment exceeding prescribed limits (Rule 6DD) - Assessment year 2008-09 - Assessee, engaged in wholesale trade of iron and steel, purchased goods and made payment in cash - Assessing Officer made addition on ground that payments exceeded prescribed limit in contravention of provisions of section 40A(3) - It was found that assessee had no bank account at place of purchase and cash payments were made on demand of seller - Whether since genuineness of purchases had not been doubted by Assessing Officer, disallowance of expenses under section 40A(3) was not justified - Held, yes [Para 10] [In favour of assessee]